The Paper Chase
Three Dublin newspaper companies are today under severe commercial pressure. With intense competition for scarce advertising income and a costly new technology package in the pipeline (leaving aside what mayor not be in other pipelines) Independent Newspapers are seeking redundancies throughhout their Abbey Street operation. The Irish Press Group, faced with declining sales and dwindling revenues, is embarking on a radical and still largely unndefined overhaul on which its long term survival depends. At the other extreme, the relative infant, the Sunday Tribune, has just undergone extennsive financial surgery, and now stands or falls on achieving an immediate and unbroken run of profitable trading. Alan Murdoch reports.
YOU'D HAVE TO BE OUT OF YOUR MIND TO WANT TO BE THE editor of a Dublin newspaper today," says a senior executive in the Independent Group. With unprecedented commerrcial pressures bearing down on them like runaway rolls of newsprint, three of the city's ten editors have been ally - sick with worry in recent weeks.
Enjoying roughly the same job security as football manaagers - even in good times - their positions are now threaatened further by a plague of painful irritants. Top of the list is the penal rate of V AT, which, at twenty-three per cent, inflates cover prices and thereby depresses circulation. Since the present recession began in 1979 advertising reveenue has been falling dramatically. Wage and newsprint costs have risen, competition from other media has stiffened, and the penetration of the Irish market by British papers has also increased.
Now, at the worst possible time, the two largest groups - the Press and the Independent - are engaged in the exxpensive and hazardous changeover to new technology, where industrial relations problems are not so much a risk as a certainty.
Newspaper publishing is not the only industry affected by these problems. But what makes its predicament unique is the way press economics interconnect in a selftuating circle. When the price of a paper jumps (and Irish papers have risen in price well in excess of the inflation rate since 1981) its circulation falls. Its advertising appeal may then decline correspondingly, cutting revenue and forcing economies, which may result in a smaller paper, tighter editorial budgets and less adventurous reporting. This causes further falls in sales, and so it goes on. It is the business equivalent of a Chinese torture.
Changes in the pattern of newspaper reading among "the great unwashed" are also causing concern. Most people now receive their first news of the day's events from radio or TV, undermining the hard news appeal of the press. Radio and television are also attracting more advertisers. TV's share of the total advertising cake overtook that of the national press for the first time in Ireland last year, winning 36% (up 2%) against the combined papers' 33.6% (down 4.9%). This year's figures point to a widening gap: between January and July TV's share of ads rose to 41.22%. The papers' slumped to a mere 29.77% - a catastrophically low share given that as recently as 1979 it stood at 52%.
Within the press, the only people benefitting from this grim scenario are the British publishers. Yet only the Daily Mirror can be said to take its Irish market seriously, being the sole paper to produce anything like an Irish edition. For the rest, sales in the Republic are viewed as a useful windfall in the battle of numbers that characterises compeetition among Fleet Street's tabloids.
IN THE CALLENDAR OF INDEPENDENT NEWSPAPERS THERE IS one event that stands out as the decisive moment year after year in charting the course for its flagship papers. It is not the public spectacle of the Annual General Meeting, or even the secret New Year's resolutions of its illustrious chairman.
It is an ostensibly relaxed retreat to the country of its board and editorial chieftains, to a hotel of appropriate comfort and culinary quality, this year in Kenmare.
During four days each July the financial and journalistic progress of the company's publications undergoes an almost forensic scrutiny. The agenda invariably runs behind time as every aspect of management is appraised ,from advertising strategy to the subjects of feature articles. The Tuesday is taken up by presentations by the individual editors followed by question and answer sessions from the entire board. .
One of the major preoccupations of the company's executives in the last twelve months has been the result of market research carried out privately for the company by Irish Marketing Surveys, headed by the deputy chairman (and Chief Executive-designate) John Meagher. It revealed a disturbing credibility problem for the Evening Herald and, to a lesser extent, the Irish Independent. Put bluntly, a hefty chunk of the "punters" (as London tabloid editors refer to their readers) didn't believe what they read in the Herald.
This image is partly due - in editors' eyes - to the immpression created by prominent corrections of inaccuracies, printed in the paper. Doubtless too, the constant pressure to come up with a "big" lead story complete with an obliigatory gargantuan headline takes its toll. This year two directors took a more personal view, and isolated the writtings of one John Feeney.
Citing his story last year during the visit of tennis player John McEnroe, James Cawley, board member, prominent solicitor, and friend of McEnroe senior (another lawyer and fellow shareholder in Atlantic Resources) pressed for the sacking of the offending journalist. In this we understand he was backed by another director, Vincent Ferguson. In the event the move foundered, with chairman Tony O'Reilly and managing director Joe Hayes citing Feeney's permanent contract as a member of staff. Nevertheless, the columnist is now under pressure to "tighten up his act".
More critically, the conference set in motion the commpany's first stage moves towards a complete re-equiprnent of its composition and printing facilities, with proposals - made public on August 9 - for making more than a quarter of its total workforce redundant.
Retrenchments also followed on from Kenmare, with a crackdown on expenses, notably reporters' taxi dockets. And in a move considered by some staff as an attempt to create an atmosphere of crisis in which redundancies would be more readily conceded, stationery items including penncils and rubbers were put under lock and key. Nothing, it seems was overlooked in the search for economy, with even soft toilet paper for the 1,000 employees being replaced by the cheaper - and extremely unpopular - hard variety.
"They're getting us where it hurts now," was one veteran's reaction.)
The summer think-in is also a unique insight into the personal likes and loathings of the board. Tony O'Reilly, it emerges, is a fervent admirer of Hugh Leonard's columns in the Sunday Independent, and - surprisingly for one who privately supported the Anti-Amendment campaign Àenjoys the increasingly conservative Mary Kenny.
Though supportive of his editors in public statements such as the annual report, O'Reilly privately subjects them to tough questioning. This year the new editor ofthe Sunday Independent, Aengus Fanning, had a particularly hard time, having to account for the paper's continuing sales slump, and facing criticisms that he was not doing anything to get circulation up again. (It shed 12% of sales, or 30,000 copies in the first six months of this year.)
The company's enduring faith in minutely-detailed market research is apparent in its commissioning of another package of IMS studies, received within the last month by Abbey Street. Senior management claim the findings are much more positive, with the Herald in particular coming out well, boasting readership in the Dublin and Leinster areas (crucial fo r ad appeal) 10% ahead 0 f the Evening Press. The same study suggests that but for the VAT levy and the resulting price rise, the paper's mass market tabloid format would have netted substantial sales increases.
The most intriguing side of the Abbey Street obsession with marketing is the role played by Hunters advertising agency (a subsidiary of the London giant, Saatchi and Saatchi - best known for their slick hard-sell of the Conserrvative Party) in shaping the papers. Each Tuesday an agency team including creative adviser Tony O'Sullivan, account executive Sean O'Meara, and from time to time managing director Gareth Oldham, descend on the building for several hours discussion of promotion plans and ideas on getting the three papers into higher income households, known in marketing language as the ABC category.
Hunters have played a key role in re-shaping the public image of the papers, and in particular the Irish Independent, traditionally heavily dependent for much of its sales on rural readers, but now making inroads into more affluent urban middle classes. (The Sunday paper's problems are more intractable - it cannot embark on a major push uppmarket without jeopardising its popular appeal-and with it those advertisers drawn by the mass readership, now stannding at 227,000.) The agency's TV ad known simply as "The Eye" which was backed by a substantial budget was carefully constructed to suggest a broad-ranging, up to date paper concerned with urgent national issues just the formula needed to appeal to the more inquiring ABC reader. With its dramatic use of current affairs film footage the ad made a strong impact, though it is open to question whether the paper was able to fulfill the expectations created. (The ad went on to win two Irish and two US awards, one of them at the New York Film Festival. 'We stopped entering it after a while," observes Hunters boss Gareth Oldham. "We got bored with winning.")
The doubtful side-effect of the marketing onslaught is that previously confident editorial executives now doubt their own instincts for what is a good story. As one commments: "There is perpetual angst over what is the right pitch for the market. Even Joe Hayes (managing director) is probably not clear in his own mind. He wants to go up market but he's not sure where that is." (Or, as an unchariitable competitor puts it "In short, Hayes is a man who literally doesn't know which way is up.") This market connsciousness now extends into the most minute decisions. A story on the popularity of Coronation Street for the daily was shot down recently on the grounds that this wasn't the sort of programme one's middle class readers would choose to watch.
But the group's difficulties are not solely" on the editorial front. Its advertising department has not been able to match the aggressive selling of some of its rivals ("the only time you'd hear from the Indo ad people is when they ring up to tell you the rates are going up," observes one ad agency boss). This has led MD Joe Hayes to become personally involved in selling space - particularly for lucrative gravure colour ads. In lunches held up to two or three times a week in his fourth floor office; management from key clients such as Carrolls, Guinness and various financial institutions are encouraged to buy space. One senior colleague claims that Hayes sells twenty-five per cent of the large display ads.
In spite of Hayes' efforts the overall advertising situation at the group remains disappointing, and in the case of the Sunday paper, little short of disastrous. The paper's appeal to advertisers is not improved by the archaic printing faciliities which limit the design possibilities available to the paper's sub-editors ..
Ironically, the company told print unions as far back as 1978 that "it was imperative that new technology be introoduced within six months." When the next set of profits figures came in they were much better than expected, and the problem was deferred. The late seventies were a highly successful period with profits rising from £2.092 million before tax to £4.063 million in 1979. At the time the company came out top in a survey of the British regional and Irish national press in its percentage return on capital deployed.
This month the company enters talks with the main unions in the building - the FWUI, the Irish Print Union, the National Union of Journalists and the National Graphical Association on a redundancy package. (Running parallel are inter union talks between the NUJ and the NGA, which are almost as highly charged.)
As yet no agreement on installation of new equipment has been made with suppliers. Last year senior management visited several US newspapers to inspect at first hand the type of plant available, but say they will not be committing themselves to any particular system, be it photocomposiition or complete direct input, until the ink is dry on redunndancy deals.
Further upheavals are on the way within the group's administration. When John Meagher, currently deputy chairman, takes over from Bartle Pitcher as chief executive in November of next year, control of all non-newspaper operations will be transferred from Abbey Street to Fitzzwilton's headquarters in Hatch Street. At present no one is clear whether this heralds a possible merger between the two companies, or conversely, the start of a dividing up of what has become a diverse and far-flung empire. The span of its activities is highlighted by the fact that at the Kennmare conference the national newspapers division is allowed only one day out of the four. With the firm's purchase of holdings in US commercial radio and advertising (the Noble Organisation), Canadian publishing (Moving Holdings) and German and French outdoor advertising ventures (Superrposter, SCW, UPA and Publi-Cites SA) the gathering has become a cosmopolitan affair with company personnel flown in from all over the world. (Other acquisitions innclude interests in Mexico [Busa and Publicidad Exterior advertising] and Britain [magazine publishing holdings and several printing operations recently closed down] .)
Meagher. the man who will assume control of this burrgeoning overseas conglomerate, is described by close collleagues as a cultivated man who enjoys poetry, gifted with an excellent sense of humour, a witty raconteur verging on the indiscreet. He was a surprise choice as deputy chairman in the eyes of the newspaper team, who feel he lacks exxperience in dealing with trade unions. Others say he is tougher than his manner suggests: "If you think Hayes is hard you should see this one. Definitely a shoot first man."
EDITORIAL STAFF IN THE INDEPENDENT GROUP ARE LADEN down with pressure to hit the right market, the reverse problem preys on their counterparts in the Press group. Staffers there complain of the management's failure to spell out the character of the target readership; and what subjects would interest them.
On the daily paper in particular, much blame for current problems is placed on the lack of direction from above. On all three papers an extra enigma is the type of readerrship passed down from the early days of the Irish Press. Lnlike the Irish Times or the Sunday Tribune with relaatively clear-cut social groups making up their audiences, the Press papers are bought across all age and class grouppings. Not only does this make identifying a prototype Press customer tricky, it also means the appeal to adverrwho generally seek specific social categories in newspapers) is depressed.
The figures make grim reading: the Sunday Press has just kisr another seven per cent of its readers, and is now .3 - .000 down on sales a year ago. Once the market leader, it :.lOW finds itself 60,000 copies a week behind the success story of the Independent Group, the Sunday World (which has grown with expansion in its Northern edition). While the editorial quality of the papers has improved in recent times, particularly the Irish Press, the daily now sells only 6.000 copies, and is largely written off by many ad agennies as not worth bothering with.
However, the biggest problems in the immediate term are with the Evening Press. It has lost over 40,000 readers in the last three years, on a much lower base figure than the Sunday. It has continued to shed them faster than its main competitor. Overall, the company recorded losses of £1.5 million before tax in 1983, against £58,000 in 1982 and £1.5 million in 1981.
The circulation of The Irish Press has declined. A paper that had built up strong sales in Dublin working class areas lost heavily there. When Tim Pat Coogan took over in the editor's chair in 1968 he revived a liberal spirit somewhat, out sales never reached their former heights (215,000 at the peak), though they did remain above 100,000 for some rime.
Despite a certain eccentricity, Coogan has a sharp mind and is very shrewd when it comes to house politics. But while he enjoyed a good relationship with the late supremo ~Jajor Vivion de Valera, the same cannot be said vis a vis me latter's son Eamon, who took over the management of rhe paper on his father's death.
The May 1983 Corporate Plan of the Press group was reportedly produced partly as an attempt to secure IDA 5J1illt aid. At the AGM in June chairman Donal Flinn took the opportunity to stress the board's responsibility to "continuously monitor and assess the performance of :;:;anagement measured against attainable objectives and targets."
The intentions may be praiseworthy, but many have yet :0 oe convinced. Commenting on the company's Corporate PIan. an NUJ official closely involved in negotiating the new staffing levels says: "If the future depended on the content of that document, any bank would have foreclosed them." Accountants, Cooper Magennis, who were commzaissioned to assess the state of the company's finances fcllowing its refusal to pay the 22nd wage round were damning, sharply criticising the lack of medium or longgterm planning.
Yet Flinn and de Valera have been effective. The redundency terms highlighted the bull-nosed management attitude - conceding only £750 per year for the first six years of service and £500 for each year thereafter.
By this spring, the air was thick with union accusations that company tactics were borrowed directly from British Leyland's former boss, Michael Edwardes, the Thatcherite. architect of the 'New Realism' in cracking unions. Methods included: threats of total closure with 100% redundancies (made repeatedly in February and March this year); direct letters to staff over the heads of elected union represenntatives (repeatedly since 1981); and unbending opposition to the ancient NUJ custom of mandatory meetings during work hours - a sacred privilege going back to the printers of the 18th century, _
Reaction to these tactics extended beyond the staff and their unions. A suggestion that the Irish Press might be closed down rather than modernised led to a Fianna Fail delegation headed by Charles Haughey turning up at the old company headquarters in O'Connell Street to protest to the company.
Other moves reflected the same confrontational strategy.
Among them was chairman Donal Flinn's calling in private accountants to investigate the printers' pension fund. The fund is administered by the printers' own trustees, and is independent of the company. The printers were not am used.
No area has seen ruthless cost-cutting to compare with that in the transport section, however. Plans are now well advanced to close the whole operation and sell the vans to former staff drivers who would be employed on a casual contract basis, thus eliminating at a stroke insurance and maintenance costs.
Ironically, union negotiators had in the past complained that the company "has never shown the imagination for paying wages in ways that avoid tax" - as other papers have, through meals and mileage allowances.
Press unions believe the company is planning a deeunionised transport operation, which will cut staff even further, if drivers, turned into self-employed contractors no longer insist on having helpers.
Imposing the Corporate Plan and introducing new techhnology in double-quick time may seem like a total victory in the Press boardroom (a £1.6 million contract has already been signed with Harris Intertype equipment suppliers). If that is their attitude they would be unwise to reach for the champagne bottles just yet. Re-equipping the papers is only one step towards survival, and on its own will not magically halt sliding sales. Before that happens there will have to be a re-equipping of management's editorial and marketing ideas, not just their machines.
WHEN VINCENT BROWNE BECAME EDITOR OF THE SUNDAY TRIBUNE in early 1983, backed by the apparently bountiful coffers of Guinness Peat Aviation chief Tony Ryan, he made his first pronouncement on the subject of working conditions:
"A good journalist," he said "is always working."
"In the NUJ they work specified hours, Mr Browne," came the reply. Facing him across the table was the innscrutable vice president of the NUJ, Ray McGuigan. They had met many times before so this was not love at first sight.
Eighteen months later the two men were face to face once more. This time there was no Tony Ryan, or any other wealthy backer in the offing, but debts in excess of £400,OOO owed by a company with only 38 employees. Once again, the subject was terms of employment, and once again Browne was striking a hard bargain.
Browne, who was formerly editor of Magill and is currently publisher of Magill, had three main demands: seven per cent pay cuts for all staff journalists with a salary ceiling for senior executives of £17,000; a postponement of plans to introduce a four-day week; and the "synergy" of writers in the Tribune and Magill.
Over the next three weeks there were eight or nine more meetings - no one is quite sure how many, as one session often ran into another. On two occasions both sides were still arguing the toss late into the night, tired, ragged and short on patience. One by one the issues separating the two sides were resolved.
The union conceded certain pay cuts with the proviso that those on the lowest grade be exempt. The discussions on pay increases and the four day week were held over till next January. Then, the NUJ insisted, pay would have to revert to former levels and a further fifteen per cent pay rise would be demanded. Terms were also agreed which would allow the editor to use sub editors for writing, and reporters for subbing.
One of the last details was the curious demand of "synergy". Several meetings had taken place when the union team sat down to eat one day in the Baggot Pitta Bar opposite the Tribune.
"I may be a complete idiot," said one of the negotiators, Eamonn McCann, "but can someone explain to me what all this synergy business is about?"
As it happened nobody could. Finally one of the Tribune chapel reps, Fintan O'Toole, hazarded what proved an innspired guess that it might have something to do with commbining the energies of the two publications. Suddenly it all became painfully clear: it meant both staffs working on both publications for no extra pay. "We rushed back across the road and told him: 'By the way, synergy is not on'."
Vincent Browne has described himself as a very placid individual. McCann prefers to call himself easygoing. Neither attribute was particularly in evidence on the evening of Tuesday July 17 when talks were still dragging on at 1O.30pm.
Suddenly, Browne got up and announced he had to go.
He was persuaded to sit down. Every few minutes the phone would ring for him, there would be a brief conversaation and the receiver would be replaced. Finally, without explanation, and in the middle of a detailed discussion he got up and made for the door. The union team - having broken arrangements of their own to attend the talks èdemanded to know where he was going.
"Well it's my fortieth birthday," he said. "I have to go to my birthday party." His wife had been ringing him throughout the evening in a state of some anxiety, he explained - she had a house full of guests there for the event, but not the person they had all come to see.
Being - they thought - close to an agreement, the union side insisted he stay and finish the business. (It is quite possible, having heard his dilemma, that the union side realised they might get Browne to cave in. Members, of the same NUJ team were in talks at the Irish Press some years ago, when chapel officers kept talks going late into the night, knowing the management side had had no dinner. The union side had put sandwiches aside and were leaving the room at intervals allegedly for the toilets. Management were literally starved out and conceded the chapel demands.)
Though agreement was finally reached on the journalists' share of the £12,000 cuts in the weekly budget needed to make the paper profitable (£2,000 a week was also saved by new terms for printing), there was conflict over Browne's insistence that everyone - no matter how low down the pay scale - had to make sacrifices. "His attitude was that he was taking the risks and his friends were taking risks, and in the circumstances the journalists were going to have to take risks too," recalls one of those present. The NUJ criticism of this line of argument was that the journalists were not shareholders and should not be treated as such.
An arrangement was agreed over the union reps request to inspect the books to enable them to judge whether Browne was in a position to guarantee secure employment as far as January, when the interim agreement expires. It was agreed an accountant hired by the union would do the inspection, deliver a verdict but not disclose figures to his clients. The accountant was on familiar territory - the man chosen was John McStay, who had executed the liquidation of the old Sunday Tribune. His opinion gave Browne the green light for the five months in question.
Questioned about the larger issues of what amount is due to be paid to Tony Ryan, Vincent Browne declined to name the sum. He added that the arrangement over the payments, which were not due for another two years, with a further two years to pay them off, is currently being renegotiated.
Sources close to Tony Ryan say the former majority shareholder sold all his shares to Browne and that any subbsequent deal with Gordon Colleary, the managing director of USIT (and now chairman of Stephens Green Publications) was between the latter and Browne.
Despite the chequered history of his involvement, we are told, Ryan enjoyed being connected with the paper: 'It was a turn-on for him," says his associate. "When you're in a tough job, and missing the races you like your side-shows to be entertaining." "His interest was two-fold. There was the attraction of a high risk venture that could have made him a lot of money. But he was also in it for the thrill of the chase. It was exciting compared, say, to running a string of launderettes."
"It's like this now - you battle through and if you make it a huge success Ryan gets his money back. If it isn't noobody is going to be put in clink over it. Tony Ryan is not a wrecker."
Browne stated that the paper's weekly costs after the economy package came to £46,500 a week, which commpared with £75,000 a week on the old Tribune at Sepptern ber 1982 prices, and around £150,000 a week on the Sunday Press and Sunday Independent today.
"We have a staffing level of 38 people - 20 of whom are journalists," he said. "That compares with 500 at the Irish Times and over 1,000 each at the Press and Indepenndent groups, although they have printers and transport staff we don't have."
As for allegations from a journalist on a rival paper that the Tribune is "virtually giving advertising away," he claimed the Tribune "has cut advertising rates less than any other paper except the Irish Times."
He also stated that the amount owed to the Revenue Commissioners is "substantially less than the figure that has been quoted." (In the August issue of Success, Frank Fitzgibbon alleged that "in excess of £250,000 was owed in unpaid VAT.")
By his own admission the paper will need external funnding of around £500,000. "That would keep us going till the middle of 1986 by which time we expect to be in very considerable profitability."
NUJ negotiators believe he will need twice that amount.
Their position may well be much tougher in January if such investment is not secured. And if the paper cannot pay the increases due, it is expected Browne will be seeking further cost cuts. Pressure on wages and jobs is intense throughout the newspaper business. The NUJ and other unions involved will think long and hard before conceding terms that could indirectly threaten jobs and wages elseew here in the city. •